Company releases interim results for H1, with sales reaching $3.87bn.
De Beers has released its interim results for the six months of 2011, ended June 30, which outline strong growth in the first half of the year and sustained demand for diamond jewellery from the US and Far East.
De Beers sales have grown by 30%, reaching USD$3.87 billion (£2.35 billonn), while the company has announced a record EBITDA of almost US$1.2 billion is a 55% increase compared to the same period in 2010 (US$762 million).
The positive growth has occurred across a number of De Beers platforms.
Its sales of rough diamonds by the Diamond Trading Company in H1 reached US$3.5 billion (£2.13 billion), including those through joint ventures, a 33% increase compared with 2010.
The higher sales have been driven by price growth of approximately 35%, the highest ever sales figure recorded for the first half of the year, which has seen uplift due to continued retail demand from the Indian and Chinese consumer markets and stronger than expected demand in America.
With a view to mined to rough diamonds, carats recovered during H1 amounted to 15.53 million, in line with the first half of 2010 (15.43 million carats).
The company’s free cash flow of US$469 million (£285 million) is a reduction of 24% on last year due to variance in stock purchases in the current period, compared with 2010.
The company reviewed the first half of the year, and sent its condolences to the deaths of three employees at its Namdeb and Debswana companies. It says it remains committed to safety concerns and is carrying out comprehensive safety reviews of all operations in the Family of Companies.
De Beers chief commercial officer Bruce Cleaver said of the results: “Sales during the period have been exceptional, driven mainly by continued growth in the Middle East, Indian and Asian retail markets and their impact on rough price growth.”
“De Beers has continued to focus on efficiency improvements and on maintaining a lower sustainable level of overhead base, which has resulted in a favourable impact on the bottom line. In the first six months of 2011, De Beers’ production totalled 15.53 million carats, reflecting the impact of maintenance and asset management difficulties and, to an extent, excessive rainfall in southern Africa,” he added.
The Forevermark, which is owned by the De Beers Group, is continuing its expansion into the core retail markets of China, Hong Kong and Japan, and has recently launched in India, Singapore and the Caribbean. The brand is now available from a small number of stores in the US, with further expansion planned later this year.
During H1, De Beers Diamond Jewellers, De Beers’ joint venture with LVMH, announced the strategic launch of the brand in China with the opening of its first mainland store in Beijing, its first store in Kazakhstan in Almaty and a new store in Dubai at Dubai Mall. Expansion plans for the remainder of 2011 are focused on stores in mainland China and second in Hong Kong.
“De Beers Canada recently completed a six month optimisation study on the Snap Lake Mine to more economically extract this complicated, but promising, ore body that has a forecast 20-year life-of-mine,” said Cleaver.
“Disposals of assets have continued and, in January, De Beers Consolidated Mines (DBCM) announced that it had entered into an agreement with Petra Diamonds to sell Finsch mine,” he added.
In a follow-up move to the sale of the Finsch mine, in May DBCM announced that it had entered into an agreement to sell Namaqualand Mines to Trans Hex, completing the DBCM’s asset disposal programme.
Cleaver says the outlook for De Beers, despite the ongoing turmoil with the global economy, is encouraging. “De Beers is confident that the exceptional growth in retail markets in India and Asia will continue to drive demand for diamonds. Reports from the recent JCK trade show indicate that the all-important Christmas season in the US, and Diwali, are set to be strong,” he added.